When a family hires a private caregiver directly in New York, the family becomes the employer. That means paying at least the legal minimum wage and overtime, handling payroll taxes, and carrying workers’ compensation and, for longer schedules, disability and Paid Family Leave coverage. A licensed agency is the employer instead, so those duties sit with the agency, and paying in cash does not remove them.
What changes legally when you hire a private caregiver yourself?
The IRS lists health aides and private nurses as household workers. Under its household employer guide, a worker is your employee if you control not only what work is done but how it is done, whether full time or part time. If an agency provides the worker and controls the work, the worker is not your employee. An aide who works in one home under the family’s instructions rarely counts as self-employed. The state Department of Labor (DOL) says a person providing home health aide services is generally considered an employee, and its guide for household employers lists your duties.
Once you are the employer, you answer to the IRS, the state Department of Labor, the Workers’ Compensation Board and the Tax Department. This is general information, not legal or tax advice; an accountant or elder law attorney can check your situation.
How much must you pay a private caregiver in New York City in 2026?
The state Department of Labor’s home care aide fact sheet sets the minimum wage at $19.65 an hour in New York City, Long Island and Westchester from 1 January 2026, rising to $20.00 on 1 January 2027. The general minimum wage in New York City is $17.00. The home care aide definition covers home health aides, personal care aides and Medicaid personal assistants by job duties. The DOL pages we read do not say in plain words which rate applies when a family hires directly, so budget for $19.65 and confirm with DOL at 1-888-52-LABOR.
Other pay rules for household workers, from DOL’s employer guide:
- Overtime at one and a half times the regular rate after 40 hours a week, or 44 hours if the worker lives in your home.
- A 24-hour day of rest every week, and three paid days of rest after one year.
- A written notice of the pay rate, overtime rate and payday, and a weekly pay statement.
Live-in schedules have their own rule. DOL states that home health aides are paid for 13 hours of a 24-hour shift if they get eight hours of sleep, five of them uninterrupted, and three uninterrupted meal hours. New York City’s household employee handout adds that if those breaks are not provided, all 24 hours must be paid. See live-in care in New York City.
Which taxes does a household employer pay in 2026?
According to the IRS, if you pay one household employee $3,000 or more in cash wages in 2026, you must withhold 6.2% Social Security and 1.45% Medicare from the wages and pay a matching 7.65% yourself. Withholding federal income tax is optional; if the employee asks and you agree, you collect a Form W-4.
Federal unemployment tax (FUTA) applies if you pay household employees more than $1,000 in any calendar quarter of this year or last. It is 6% of the first $7,000 per employee, with a credit of up to 5.4% for state unemployment contributions, so the net rate is 0.6%. You report all of it on Schedule H, attached to your Form 1040. Details are in the IRS Household Employer’s Tax Guide, which also requires a Form I-9 by the employee’s first day.
New York adds its own steps. Per the Tax Department’s household help bulletin, you register as an employer at $500 in cash wages in a quarter, report a new hire within 20 days and file quarterly Form NYS-45. State income tax withholding is voluntary; if you both agree, the employee completes Form IT-2104. The bulletin dates from 2012, so check current instructions.
What insurance does a family need for a private caregiver?
The Workers’ Compensation Board’s coverage requirements page sets two hour thresholds for domestic workers, including home health aides. Hours include time at the residence, sleeping and eating included, and any hours you require the worker to be present. A homeowner’s policy does not cover household workers.
| Household employer checklist | What the official sources say |
|---|---|
| Get an EIN, a signed Form I-9 and a written pay notice | IRS: I-9 by the first day; DOL: notice of pay, overtime and payday when you hire |
| Pay weekly, at least minimum wage, with overtime | DOL and the NYC handout; keep records (NYC says three years) |
| Withhold and pay Social Security and Medicare; pay FUTA; file Schedule H | IRS: $3,000 or more in cash wages in 2026; FUTA above $1,000 in any quarter |
| Register for NY unemployment insurance | DOL guide IA 318D: $500 in a calendar quarter |
| Workers’ compensation | WCB: 40 or more hours a week; DOL adds live-in workers |
| Disability and Paid Family Leave | WCB: 20 or more hours a week and 30 or more days a year |
| Paid safe and sick leave | NYC handout: up to 40 hours a year (handout dated 11/2023; check nyc.gov/workers) |
What does an agency handle that a private hire does not?
A licensed agency is the employer of record. In practice, that covers the payroll, tax filings and employer insurance in the table above, plus:
- Licensing. The Department of Health says an organization must be licensed or certified to provide or arrange home care.
- Background checks. DOL notes that an agency usually runs a criminal history check through the Department of Health; a family hiring on its own will not have access to it.
- Supervision and backup. A nurse oversees the care plan, and a replacement is arranged when an aide is sick or not a good fit.
Our guide on how to choose a home care agency lists questions to ask. For the private-pay service itself, see private home care.
Private hire vs agency vs CDPAP: how do they compare?
| Private hire | Licensed agency | CDPAP (Medicaid) | |
|---|---|---|---|
| Who is the employer | The family | The agency | The consumer directs the work; PPL processes pay and withholdings |
| Payroll and taxes | You, through Schedule H and NYS-45 | The agency | PPL, the statewide fiscal intermediary |
| Hiring, training, scheduling | You | The agency | The consumer or representative |
| Criminal history check through DOH | Not available to you (DOL) | Usually done by the agency (DOL) | Not described on the DOH CDPAP page |
| Eligibility | None | None for private pay | Medicaid, plus the Minimum Needs Requirement for new assessments |
What does each option cost the family?
Agency rates vary by agency, schedule and level of care, and no official source publishes them, so the table shows only verified figures. Ask for written quotes and see what home care costs in New York.
| Cost item | Private hire | Agency |
|---|---|---|
| Wage floor in NYC, 2026 | $17.00 general, or $19.65 home care aide rate (confirm with DOL) | Aides are paid at least $19.65; the hourly rate billed to you varies |
| Payroll taxes | 7.65% Social Security and Medicare once you pay $3,000 in 2026, plus 0.6% federal unemployment on the first $7,000 | Built into the agency’s rate |
| NY unemployment, workers’ comp, disability, Paid Family Leave | Premiums you arrange; amounts vary by carrier | Built into the agency’s rate |
| Example: 40 hours a week at $19.65 | $786 wages plus $60.13 Social Security and Medicare, about $21.15 an hour before other premiums | Ask for a written quote |
The example is arithmetic on the figures above, not a quote. It leaves out insurance premiums, sick leave and the cost of covering absences.
What are the risks of paying a caregiver in cash?
- Back taxes. The IRS says that if you are required to withhold and pay employment taxes and do not, you are generally liable for them, with interest and penalties possible.
- No injury coverage. If the caregiver works 40 or more hours a week or lives in your home and you have no workers’ compensation policy, you are out of compliance, and your homeowner’s policy does not fill the gap.
- Wage claims. DOL says labor laws protect all workers regardless of immigration status.
- No records. You must keep daily and weekly hours and give a weekly pay statement. Cash leaves no paper trail.
Can Medicaid-funded care be topped up with a private aide?
We could not find a New York Department of Health rule that says yes or no, so we do not state one. Ask your Medicaid plan or local social services office in writing, and make sure no paid hours overlap. If the real problem is too few authorized hours, ask for a reassessment first; our guide to what Medicaid covers for home care explains how hours are set.
Is CDPAP an alternative to hiring someone yourself?
For a Medicaid member, often yes. The Department of Health says CDPAP lets Medicaid members choose and hire their own caregiver, including a friend or family member other than a spouse, designated representative or the parent of a consumer under 21. PPL is the statewide fiscal intermediary and processes wages, benefits and tax withholdings, so the family does not run payroll itself. The member must still keep payroll records. Check CDPAP eligibility in New York before relying on it.
How do you screen a private caregiver before hiring?
- Write down the tasks and hours first. Injections or wound care are skilled nursing, not aide work.
- Meet the person and call at least two former employers.
- Ask about aide training; see the HHA certificate guide.
- Arrange your own background check, since the state check is not open to you.
- Complete the I-9 by day one and sign a written agreement on pay, overtime, payday, duties, day of rest and sick leave.
- Set up payroll and insurance before the first shift, and decide who covers sick days.
How do you decide between a private hire and an agency?
- A private hire suits a family that can run payroll, cover gaps itself and wants a specific person.
- An agency suits families who want insurance, supervision and replacements handled for them.
- CDPAP suits Medicaid members who want to pick their caregiver and have PPL run payroll.
What a good agency adds: advice from our nurse director
Anna Klyauzova, RN, MSN, MPA, Director of Patient Services at ProLife Home Care, on what she sees in practice:
Three things separate a good agency. First, RN supervision: a care plan is only useful if someone keeps checking it against the patient’s current condition, and if the person starts falling more or moving worse, the plan changes. Second, matching: an HHA or PCA should fit on language, schedule, location and experience with the person’s needs, not only on certification. Third, replacement: if an aide isn’t right or can’t make a shift, the family should know exactly whom to call.
For private-pay care, we usually match an HHA or PCA in 24 to 48 hours when staff are available, and care can often start within 48 hours. Our stated target for replacing an unsuitable aide is up to 24 hours. Those timings apply mainly to private care; with Medicaid, the start date also depends on the assessment and authorization.
We are a licensed home care agency in Brooklyn and Queens, licence #2572L001, New York State Department of Health. To compare an agency with a private hire for your family, call (718) 232-2777 or use our contact page.
Wage figures and thresholds change each year. Everything above was checked against irs.gov, dol.ny.gov, wcb.ny.gov, tax.ny.gov, nyc.gov and health.ny.gov on 9 October 2026. This is general information, not legal or tax advice.
Frequently asked questions
Is it cheaper to hire a private caregiver than to use an agency?
The hourly rate can look lower, but a private hire adds 7.65% employer payroll tax, unemployment tax, insurance premiums and the cost of cover when the caregiver is out. Compare written agency quotes with the all-in cost.
Do I have to pay taxes on a caregiver I hire directly?
Yes. At $3,000 or more in cash wages in 2026 you owe Social Security and Medicare tax, reported on Schedule H with your Form 1040. New York also requires registration and unemployment insurance at $500 a quarter.
Does a private caregiver need workers’ compensation in New York?
Yes, if they work 40 or more hours a week for you or live in your home. The Workers’ Compensation Board counts time at the residence, including sleeping and eating.
Can I pay my caregiver in cash?
Cash is a payment method, not an exemption. Taxes, minimum wage, overtime and insurance duties apply however you pay.
Can a home health aide be self-employed?
Only if they run their own business, offer services to the public and are free from your direction and control. An aide who works in one home under the family’s instructions is generally treated as an employee.
How are live-in caregiver hours paid in New York?
DOL says aides on 24-hour shifts are paid for 13 hours if they get eight hours of sleep, five uninterrupted, and three hours of meal breaks; otherwise all 24 hours are paid. Overtime for live-in workers starts after 44 hours.
Can Medicaid pay a caregiver I choose myself?
Through CDPAP it can. A Medicaid member who qualifies hires their own personal assistant, who can be a relative other than a spouse, and PPL processes the pay. Ordinary agency-based Medicaid care uses aides the agency assigns.
